A Big Payday

Good properties still draw financing. Witness Developers Diversified Realty Corp.'s big package with lenders that led Chairman and CEO Scott A. Wolstein to trumpet the firm's “broad access to numerous capital sources despite the challenges of today's market.” Cleveland-based Developers Diversified collected more than $500 million in new loans and commitments — including $350 million in net proceeds from a new portfolio of mortgages. Earlier, the firm closed a $71 million construction loan on a Florida development and extended a loan on a Brazilian joint venture.

“It is a difficult time to get money, but it doesn't mean that money's not available for quality projects,” says Rich Moore, a REIT analyst with RBC Capital Markets in Cleveland.

Mortgage lenders weigh properties as well as the company holding them, notes analyst Moore. In other words, the DDR package is to some extent a bankers' vote of confidence on DDR's portfolio.

Meanwhile, says Moore, “the company itself is not over-levered. They have a good balance sheet. Each project has to more or less stand on its own in this environment, and even a very good company faces the risk of not getting financing.”

In other words, don't expect bankers to back just any project. “The willingness of financial institutions to lend is at a decade low,” says Moore. “That doesn't mean they won't lend to anybody — but if you're not the crème de la crème, you face the prospect of having a very difficult time financing something.”